Blockchain, made famous by Bitcoin, can be described as an open, distributed ledger database maintained by decentralised nodes instead of centralized authorities.
It is a transparent system that is used to secure and transfer financial data and asset-related transactions. One of the most well-known applications of blockchain technology is cryptocurrency.
The blockchain is in the form of a distributed ledger where each encrypted block holds information about previous valid transactions in order of its timeline.
In short, data is stored as a block, and a copy of the data info, which is the transaction information, is held by all nodes—network participants. To add or modify a transaction, authorisation from all nodes is required.
This structure makes blockchain transparent and highly secure, enabling anonymous people to transact over the internet without any middlemen.
How Blockchain Works
Each asset is recorded as a block of data, and can be tangible or intangible. Successive blocks are connected to ones before them to make a series of blocks in a chain.
As the asset changes ownership, these blocks form a connected, transparent and unaltered chain of data which entails the time and sequence of the transactions.
Blockchain, being secure and immune to tamper, maintains this feat through consensus verification of additional blocks before they are added to the sequence.
Blockchain as a Transfer of Value Protocol
The exchange of value without blockchain practically seems like exchanging information in the crude ages: it is characterized by numerous intermediaries, lack of privacy and high risk of theft.
Thanks to blockchain, there is now a safer approach to transfer value in a transparent yet secure manner.
The steps involved in validating a transaction in the blockchain are:
- A node requests a transaction via its wallet.
- The transaction is sent to all the participating nodes/computers on the chain.
- The participating nodes validate the transaction against the blockchain validation rules. Other participating nodes can access and confirm the validation any time.
- The validated transactions are stored securely in a block which becomes part of the blockchain.
Note: To alter any information in the blocks, at least 51% of the participating nodes must concur.
How to transfer and deposit on Blockchain
Transferring and depositing digital assets on blockchain, mainly cryptocurrencies and NFTs requires basic tools and strategies. One of the basic tools needed is the cryptocurrency wallets.
Unlike regular cash wallets that hold your cash, coins and cards, you need crypto wallets to transact with a blockchain. Crypto wallets grant you access to your cryptocurrencies like Bitcoin and Ethereum.
They come in different forms, from hardware wallets e.g. Ledger and Trevor to Mobile Apps e.g. Metamask and Coinbase.
Steps involved in transferring from one Wallet to another
Crypto wallets can be used to transfer digital assets from one user to another. The following are basic steps involved in transferring digital assets from one Wallet to another:
- Get the wallet address/ public key/ public address of your recipient. It can also be a QR Code. Scan the QR code or copy and paste the public address into the recipient field in your wallet.
Trust wallet on mobile showing the QR code and Public Address to receive Binance-Peg BSC- USD (BEP20)
- Enter the amount you wish to send. Then, you will choose the value you wish to send in, either a cryptocurrency or a fiat amount like US Dollars.
- Simply click Send.
- Congratulations! You have now successfully transferred your asset.